Cash Management

In Business, Your Money Should Work For You.
With a Business Cash Management Trust at Chesapeake Bank, you can put your money to work. Instead of just sitting in a checking account waiting to be spent, your money can earn interest in our sweep account.

What It Does And How It Works
A Chesapeake Business Cash Management Trust Account is a trust account opened by a customer for his or her benefit to allow a trustee to manage funds through collective investment. The funds contributed will be invested and reinvested by the Chesapeake Bank as fiduciary. The customer's funds will be co-mingled along with funds from other trusts, as defined in the bank's Plan of Liquid Taxable Common Trust Funds (The Plan), approved July 13, 1981 by its Board of Directors and subsequent amendments.

Trust Agreement
A preprinted trust agreement drawn by Chesapeake Bank's independent counsel names the Chesapeake Bank Trust Department as trustee. The trust agreement specifies investment in the Chesapeake Bank Liquid Taxable Common Trust Fund as a participating trust. The trustee of the participating trust and all persons interested therein shall be bound by the provisions of the Liquid Taxable Common Trust Fund. Each trust participant is encouraged to review the trust agreement with his/her own personal attorney.

To Open An Account
After signing a trust agreement and a sweep authorization, you have completed all that is necessary to begin enjoying the benefits of a Chesapeake Business Cash Management Trust.

Additions
A customer may not make direct additions to his business cash management trust. However, any deposits made to the customer's business checking account will become subject to the sweep authorization.

Sweeps
In order to maintain the established balance in your business checking account, daily sweeps will be made "to" or "from" your Business Cash Management Trust Account.

Monthly Statements
Shortly after the end of each calendar month, each customer will receive a monthly account statement showing the balance and interest earned for the month.

Interest Computation And Payment Trust accounts will receive interest from the day funds are invested to the day of withdrawal. Interest rate to be paid will be computed daily based on the yields of the Liquid Taxable Common Trust Fund. All earnings will be credited to each trust account based on the principal cash balance in that account, less trustee fees. Interest will be computed on a 365-day basis and accrued on each account until the statement date when it will be credited to that account. Upon crediting interest income to the trust account, that income becomes co-mingled with the invested principal. Upon closing an account, an interest check will be drawn and mailed to the customer at the end of the calendar month in which the account is closed.

Fees
Interest yields quoted daily or weekly represent the net rate applied to the customer's trust funds for the interest period. This is after fees of no more than 1.5% per annum of the principal have been deducted from interest income. The sweeps to and from the account will be without charge. The trust fee shall cover the cost of investments, bookkeeping, mailing, etc. However, it does not cover special handling of the account requested by the customer. Special handling charges may be assessed by the trustee for special services; for example, special monthly statements and account closing. Charges may be changed by the bank with 30 days notice posted in the bank lobby of each Chesapeake Bank office.

Income Taxes
Chesapeake Bank's Business Cash Management Trust invests its funds in a common trust fund with a year-end of December 31. Prior to February 1 of each year, the bank shall mail, to the customer's last known address, a statement of interest earned during the prior tax year (January 1 through December 31).

To Obtain Balance
Customers may obtain a current balance from their monthly account statement or by calling a Chesapeake Bank branch office.

To Close An Account
A customer may close their account by simply notifying Chesapeake Bank.

Investments
The trustee shall invest funds only in readily marketable securities which it may deem proper. The term readily marketable securities shall mean (a) direct obligation of the United States or other obligation fully guaranteed by the United States as to principal and interest, (b) an obligation of an agency in the United States, (c) FDIC or FSLIC insured certificates of deposits, or (d) repurchase agreements of obligations which are suitable for investment under the categories set forth above.

The trustee, however, shall not:

• Invest in assets other than those defined as readily marketable securities.
• Invest more that 10 percent of its total assets in securities on one issuer, except direct obligations of the United States Government or other obligations fully guaranteed by the United States as to principal and interest unless exempted by the Comptroller of the Currency.
• Make loans.
• Make puts, calls, straddles, spreads, or any combination thereof
• Purchase or sell securities of other investment companies (except in connection with a merger, consolidation, acquisition or reorganization), real estate or commodities.
• Engage in underwriting of securities issued by others.
• Invest in obligations of the commercial banking department of the bank except of funds awaiting investment or distribution.

A copy of the plan of Liquid Taxable Common Trust Fund may be reviewed at the main office in Kilmarnock, Virginia. The plan was approved by Chesapeake Bank's independent counsel and bank attorney and a copy was forwarded to the Comptroller of the Currency on July 24, 1981.

Valuation
The Liquid Taxable Common Trust Fund is valued as of the close of business each day on the days when the Federal Reserve Bank of Richmond is open. The value of all securities will be determined as provided by Section 4.3 of The Plan to which there shall be added the uninvested principal cash balance determined by the trustee to the principal and from the sum of said amounts there should be deducted all charges, expenses, and liabilities which in the discretion of the trustee are properly charge- able against the principal. Since the Common Trust Fund has adopted the policy of normally holding portfolio instruments to maturity, all portfolio instruments held by the Liquid Taxable Common Trust Fund will be valued at amortized cost as of the valuation date. The principal value of any valuation date of each unit of the Liquid Taxable Common Trust Fund is determined by dividing the principal amount of the Common Fund by the number of units into which the Common Fund has been divided. A unit shall be defined as $1.00.

THE VALUE OF A PARTICIPANT'S INTEREST IN THE FUND MAY FLUCTUATE AND COULD DECLINE, UNLIKE THE VALUE OF A DEPOSIT, SINCE THE FUND'S INCEPTION IN 1981, THERE HAS BEEN NO DECLINE IN VALUE AND NO LOSS TO A PARTICIPANT.

Financial Reports
The bank, at least once during each period of 12 months, shall prepare a financial report of the Common Fund based on an audit, which report shall be made available to trust customers.

For more information, contact your One-on-One Business Banker or the Chesapeake Bank branch nearest you.